1-Bushwhacker Mowing needs $360 million to support growth. If it issues new common stock to raise...
1-Bushwhacker Mowing needs $360 million to support growth. If it issues new common stock to raise the funds, the flotation (issuance) costs will be 4 percent. If Bushwhacker can issue stock at $60 per share, how many shares of common stock must be issued so that it has $360 million after flotation costs? Show how much of the issue will consist of flotation costs and how much Bushwhacker will receive after flotation costs are paid.
2-Mom's Motel Corporation (MM) plans to issue bonds to raise $175 million that it needs to support future operations. MM's investment banker will charge 2.5 percent of the total amount issued to help MM raise the funds. In addition, MM will incur other costs associated with the issue that equal $500,000. The market value of each bond at issue time will be $1,000. How many bonds must GM sell to net $175 million after flotation costs? Assume that fractions of bonds cannot be issued.
3-United Uninsured Underwriters (U3) needs to raise $192 million. If it issues new common stock to raise the funds, the flotation costs will be 8 percent. The new issue will also require U3 to pay $280,000 in fees to its lawyers, the printer, and others associated with the issue. U3 can issue stock at $25 per share. How many shares of common stock must be issued so that it has $192 million after flotation costs? Show how much of the total dollar amount will be flotation costs and how much U3 will receive after the flotation costs are paid.
4-Jasmine Flowers must raise $345 million for its future expansion. To do so, Jasmine expects to issue new common stock. Investment bankers have informed the company that the flotation costs will be 6.5 percent of the total amount issued and that the company will incur another $576,000 in costs associated with the issue. Jasmine can issue its stock for $55 per share. Determine how many shares Jasmine must sell to net $345 million after flotation costs.
5-Wilderness World (WW) needs to raise $84 million in debt. To issue the debt, WW must pay its underwriter a fee equal to 3 percent of the issue. The company estimates that other expenses associated with the issue will total $487,000. If the face value of each bond is $1,000, how many bonds must be issued to net the needed $84 million? Assume that the firm cannot issue a fraction of a bond.
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1-Bushwhacker Mowing needs $360 million to
support growth. If it issues new common stock to raise...
U3 needs $192 million to stay in business. If it issues new common stock to raise...
U3 needs $192 million to stay in business. If it issues new common stock to raise the funds, the flotation costs will be 8%. The new issue will also require U3 to pay $280,000 in fees to its lawyers, printing cost, and other costs associated with the issue. U3 can issue stock at $25 per share. How many shares of common stock must U3 issue so that $192 million after flotation costs? Show how much of the total dollar amount...
3-19 Mom's Motel Corporation (MM) plans to issue bonds to raise $175 million that it needs...
3-19 Mom's Motel Corporation (MM) plans to issue bonds to raise $175 million that it needs to support future operations. MM's investment banker will charge 2.5 percent of the total amount issued to help MMM raise the funds. In addition, MM will incur other costs associated with the issue that total $500,000. The market value of each bond at issue time will be $1,000. How many bonds must MM sell to net $175 million after flotation costs? Assume that fractions...
3-15 16 Boat Emporium (BE) must raise $225 million. To do so, BE expects to issue...
3-15 16 Boat Emporium (BE) must raise $225 million. To do so, BE expects to issue new common stock. BE's Investment banker will charge issuing costs equal to 10 percent of the total amount issued. If the stock can be issued for $160 per share, how many shares must BE sell to net $225 million after flotation costs. Show how much of the issue will consist of flotation costs and how much BE will receive after the flotation costs are...
Cully Company needs to raise $23 million to start a new project and will raise the...
Cully Company needs to raise $23 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 55 percent common stock, 10 percent preferred stock, and 35 percent debt. Flotation costs for issuing new common stock are 11 percent, for new preferred stock, 7 percent, and for new debt, 2 percent. What is the true initial cost...
Cully Company needs to raise $20 million to start a new project and will raise the...
Cully Company needs to raise $20 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 65 percent common stock, 9 percent preferred stock, and 26 percent debt. Flotation costs for issuing new common stock are 9 percent, for new preferred stock, 6 percent, and for new debt, 5 percent. What is the true initial cost...
5. Goff Company needs to raise $80 million to start a new project and will raise...
5. Goff Company needs to raise $80 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 65 percent common stock, 5 percent preferred stock, and 30 percent debt. Flotation costs for issuing new common stock are 6 percent, for new preferred stock, 4 percent, and for new debt, 2 percent. What is the true initial...
Southern Star Company needs to raise $40 million to start a new project and will raise...
Southern Star Company needs to raise $40 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 50 percent common stock, 15 percent preferred stock, and 35 percent debt. Flotation costs for issuing new common stock are 8 percent, for new preferred stock, 5 percent, and for new debt, 2 percent. What is the true initial...
Calculating Flotation Costs Southern Alliance Company needs to raise $75 million to start a new project...
Calculating Flotation Costs Southern Alliance Company needs to raise $75 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 70 percent common stock, 5 percent preferred stock, and 25 percent debt. Flotation costs for issuing new common stock are 7 percent; for new preferred stock, 4 percent; and for new debt, 3 percent. What is...
Cully Company needs to raise $29 million to start a new project and will raise the...
Cully Company needs to raise $29 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 70 percent common stock, 10 percent preferred stock, and 20 percent debt. Flotation costs for issuing new common stock are 10 percent, for new preferred stock, 7 percent, and for new debt, 6 percent. What is the true initial cost...
Cully Company needs to raise $75 million to start a new project and will raise the...
Cully Company needs to raise $75 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 65 percent common stock, 5 percent preferred stock, and 30 percent debt. Flotation costs for issuing new common stock are 6 percent, for new preferred stock, 3 percent, and for new debt, 3 percent. What is the true initial cost...
3-19 Mom's Motel Corporation (MM) plans to issue bonds to raise $175 million that it needs to support future operations. MM's investment banker will charge 2.5 percent of the total amount issued to help MMM raise the funds. In addition, MM will incur other costs associated with the issue that total $500,000. The market value of each bond at issue time will be $1,000. How many bonds must MM sell to net $175 million after flotation costs? Assume that fractions...
3-15 16 Boat Emporium (BE) must raise $225 million. To do so, BE expects to issue new common stock. BE's Investment banker will charge issuing costs equal to 10 percent of the total amount issued. If the stock can be issued for $160 per share, how many shares must BE sell to net $225 million after flotation costs. Show how much of the issue will consist of flotation costs and how much BE will receive after the flotation costs are...
Cully Company needs to raise $23 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 55 percent common stock, 10 percent preferred stock, and 35 percent debt. Flotation costs for issuing new common stock are 11 percent, for new preferred stock, 7 percent, and for new debt, 2 percent. What is the true initial cost...
Cully Company needs to raise $29 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 70 percent common stock, 10 percent preferred stock, and 20 percent debt. Flotation costs for issuing new common stock are 10 percent, for new preferred stock, 7 percent, and for new debt, 6 percent. What is the true initial cost...
Cully Company needs to raise $75 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 65 percent common stock, 5 percent preferred stock, and 30 percent debt. Flotation costs for issuing new common stock are 6 percent, for new preferred stock, 3 percent, and for new debt, 3 percent. What is the true initial cost...
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